Apple Spent $2 Billion for Rights to Nortel’s LTE Patents

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Apple Spent $2 Billion for Rights to Nortel’s LTE Patents

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You might have heard about Nortel’s (RIP, our dear old Canadian friend) patent portfolio being sold to the highest bidders, with approximately $4.5 billion spent by a consortium of companies that consisted of RIM, Ericsson, Microsoft, Sony, and Apple. According to Reuters, Google made strange bid amounts of ‘pi’ and lost.

Robert Cringely notes the breakdown of these patent acquisitions, and notes Apple paid $2 billion to purchase Nortel’s Long Term Evolution (LTE, or 4G) patents, in an attempt to hobble Google and their Android smartphone OS.

As a former successful Canadian telecom, Nortel competed with the likes of Cisco and others, building up their patent war chest in the process. The consortium, along with Apple will have an advantage over Google by swallowing up these telecommunication patents, as explained by Cringely:

Google is the youngest of these companies and has probably the smallest patent portfolio, most of which isnâ€™t mobile or telecom related. This puts Google and Android at a legal disadvantage and explains the 45 patent infringement suits that one analyst says Google in presently facing in the mobile area alone.

Here’s the breakdown of the prices paid for the patents; Cringely notes he is the only source to write about this in detail:

Hereâ€™s the consortium participation as I understand it. RIM and Ericsson together put up $1.1 billion with Ericsson getting a fully paid-up license to the portfolio while RIM, as a Canadian company like Nortel, gets a paid-up license plus possibly some carry forward operating losses from Nortel, which has plenty of such losses to spare. For RIM the deal might actually have a net zero cost after tax savings, which the Canadian business press hasnâ€™t yet figured out.

Microsoft and Sony put up another $1 billion.
There is a reportedly a side deal for about $400 million with EMC that has the storage company walking with sole ownership of an unspecified subset of the Nortel patents.

Finally Apple put up $2 billion for outright ownership of Nortelâ€™s Long Term Evolution (4G) patents as well as another package of patents supposedly intended to hobble Android.

Google’s Android boss tweeted there are now over 500,000 Android activations per day. Apple has played its part in this crucial bid of Nortel’s patents, playing keep away, and possibly using these patents for future litigation against Google to stop its rise. It has been reported Nortel holds seven major patents crucial to LTE technology–with Apple now owning these outright.